So it's official. As of the first quarter of 2008, Inditex, the phenomenally successful Spanish fast-fashion conglomerate and parent company of Zara, has officially overtaken The Gap to become the world's biggest fashion retailer. In the meantime, the once venerable Gap is still tweaking its product around the edges, struggling to find a formula that works.
Zara stores have been popping up on high streets and in malls around the world, registering a whopping €6.3b in sales in 2007, making it larger than Louis Vuitton. Perhaps more surprisingly, the performance of Inditex's smaller brands like Bershka and Massimo Dutti has also been strong, registering revenues of €925m and €696m respectively, in 2007, making Bershka's business larger than that of Christian Dior Couture and Massimo Dutti's greater than that of Bottega Veneta.
Earlier this year, the Business of Fashion visited a Central London outpost of the Gap, one of America's most well-known high street retail chains. We left sorely disappointed with the product, the slow pace of change of collections (the opposite of 'fast fashion'), and the deep discounting that created detrimental expectations in the minds of Gap's core consumer base. Then, a few weeks later Paul Pressler was booted out of the CEO suite, a swift reaction to the financial results achieved under his tenure. To say the least, things have been looking pretty dismal indeed.
The bad news continued when the Gap reported yet another decrease in overall same-store sales today across its three brands, dropping 7% versus last year and failing to meet analyst expectations. This is the equivalent of a death knell for a public company. But, it seems there may be hope for the Gap yet.
A visit to the same Central London Gap store on the weekend was like visiting a very different store. The place was rammed with shoppers and the product was much improved. The sophistication and simplicity of the designs stood out and the positioning of these new designs as redefined classics was very much in tune with Gap's core market and what consumers expect of this venerable chain. The deep discounting was still there, but apparently not on the European-designed collection.